Another new loan offering, Woodville, rated A, for £200,000 with an 8 per cent fixed yield, has just landed on site. The loan is 62 per cent funded at the time of writing. Below we offer an excerpt from the borrower’s presentation. As ever, we have done due diligence but cannot warrant the truth of the statements. See risk warnings on site before investing.
Woodville was originally a financial consulting business, but it is now focusing on litigation finance. This is financing provided to solicitors so that they can pursue claims on behalf of clients that do not have the resources to fund the litigation themselves. We focus on claims covered by After the Event (ATE) insurance. Within this area, we have funded claims relating to Road Traffic Accidents and House Disrepair so far. We are looking to add claims for Japanese Knotweed in the future. On average, Road Traffic Accident claims take 4-5 months to settle and House Disrepair claims take around 9 months to settle. Around 90% of claims succeed and the solicitor then repays the loan. We take a personal guarantee from the solicitor and a charge of the legal firms assets. If a claim fails, the ATE insurance pays out and we are named in each insurance policy. The average value of a claim is 3,000.
This new offering has recently landed on site is a B+ loan of £280,000 with a five-year term and an indicative interest rate of 10 per cent. It’s 12 per cent filled at the time of writing.
The loan funds will be used for an acquisition. See below an excerpt of the borrower’s representations as it seeks funds. As ever, we’ve done due diligence, but cannot warrant the accuracy of the statements. For more detail. CLICK HERE.
The performance of DK Tuning has been strong, with turnover doubling every year so far. Gross margins are stable at around 50%, and crucially we have enough staff and resources already to absorb the target business. The combined turnover of DK Tuning and the target company will be over 1.1 million on day one, and we predict that this will rise steadily as our better customer service model and improved rate of sales per sub-dealer take effect. There should be a slight uplift in gross margins because of the integration benefits.
Historical Performance And IFISA Process Guide
That figure is the result of over £17 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.
All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.
So here’s our guide to the process:
The ISA allowance for 2019/20 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.
Risk: Security, Access, Yield
Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.